China’s Latest Economic Data Pose Policy Issues

China’s economic growth appears to have slowed significantly at the start of the year, raising questions about the government’s ability to hit its expansion targets without exacerbating strains on the financial system. Despite the impact of the Lunar New Year, this decline is still considered as a big slide by economists. China’s Premier Li Keqiang said last year that the country could grow at a more modest 7.2% and still generate enough jobs to keep unemployment down and avert social unrest. Some observers say China should allow growth to slow as it transitions away from an economy dependent on credit-fueled investment to one in which higher levels of consumption play a greater role. Activity in China’s factories shrank again in February, a preliminary private survey found on Thursday, reinforcing concerns of a minor slowdown in the economy and spooking markets across the region. In spite of the concern express by many observers, the very strong trade data for January suggests a positive note on the Chinese manufacturing outlook.

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Every week, China Program’s Senior Advisor Dr. Robert A. Kapp compiles a reading list and provides commentary, for you to better understand China.

Robert A. Kapp is senior advisor to the China Program at the Carter Center. He has been principal of Robert A. Kapp and Associates, a business consulting firm, since 2004. From 1994 through 2004 he served as President of the United States-China Business Council…